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Energy and Power Insurance in the GCC Countries

  • September 2015
  • -
  • Finaccord
  • -
  • 41 pages

Energy and Power Insurance in the GCC Countries is a report and market data file about the current and future outlook for the insurance of risks associated with the fast-evolving energy (oil and gas) and power sectors in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

In addition to showing how its value has changed since 2010, analysis of the energy insurance market in these six countries sub-divides it both by type of operation (i.e. upstream, midstream and downstream) and by type of risk (i.e. business interruption, construction, control of well / OEE, environmental liability, general liability, property and other) with these two splits then cross-tabulated against each other to identify the most valuable market segments. In addition, its value (split by type of operation) is forecast to 2018 and estimates for the market shares of energy insurance underwriters are provided, expressed as percentage ranges (e.g. 5.0% to 7.5%).

Market value data spanning 2010 to 2014 (with a forecast to 2018) is also provided for the power insurance sector in the six GCC countries with segmentations in this case provided by power source at both a high level (i.e. conventional, renewable, other) and a detailed level (i.e. coal, gas, nuclear and oil in the conventional segment, and biomass, hydro, solar and wind in the renewable segment), as well as by type of risk (i.e. business interruption, construction, liability, property and other). Once again, these splits are cross-tabulated against each other and market shares for underwriters of power insurance are estimated as percentage ranges.

Over and above this unique market data, the study also examines the market drivers for both energy and power insurance in the GCC countries (e.g. trends in oil and natural gas production and imports, trends in power generation segmented by source) plus the role played by captive and mutual underwriters (including the approximate percentage of the respective market values that they insure). In addition, it identifies the brokers with the most significant involvement in these two sectors, and considers how changes in the underlying energy and power sectors are likely to impact the associated insurance markets.

Table Of Contents

Energy and Power Insurance in the GCC Countries
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about and what is its rationale? 3
Several factors underpin the rationale for producing global research about energy and power insurance… 3
… including its worldwide value of more than USD 235 billion in 2014… 3
… and the growth of hydraulic fracturing (fracking), deepwater drilling, solar power and wind power 3
Methodology 3
Research program 3
Sources 3
Definitions 4
Energy (oil and gas) insurance 4
The energy insurance market segments between the upstream, midstream and downstream sectors… 4
… and by several types of cover, including one specific to upstream insurance 4
Power insurance 4
Power insurance covers the conventional, renewable and other power sectors 4
Premiums 4
Abbreviations 5
Finaccord 5
20 ENERGY (OIL AND GAS) INSURANCE 7
Energy (oil and gas) market and competitor background 7
Production, imports and associated infrastructure 7
The GCC countries control a large share of the world's oil and gas reserves 7
Competitive environment 11
There are relatively few entities involved in the underlying energy market in the GCC countries… 11
and deepwater operations have not yet been established 11
Energy (oil and gas) insurance market value, growth and segmentation 11
Increasing capacity and declining rates have driven down the energy insurance market value in real terms 11
Insurance for upstream operations has grown the most rapidly in recent years… 13
… while downstream premiums have tended to stagnate 13
Property is comfortably ahead of business interruption as the largest risk segment 13
Cover for political risks and cyber attacks is growing in importance 14
Underwriter market shares 16
Upstream insurance 16
AIG and Lloyd's of London vie for leadership in the upstream energy insurance segment… 16
… albeit captive and mutual insurers account for a substantial proportion of total business 16
New competitors have introduced additional capacity in recent times 17
Midstream and downstream insurance 18
AIG is also strong in the midstream and downstream segments, this time with ADNIC as its main rival 18
Broker market shares 20
Aon and Marsh are likely to dominate energy insurance broking in the GCC countries 20
Future outlook 22
Oil and natural gas production 22
Energy (oil and gas) insurance 24
in spite of significant investment activity across all parts of the energy value chain 24
Local insurance companies have struggled to compete with foreign ones in this arena 24
30 POWER INSURANCE 27
Power market and competitor background 27
Power generation 27
Virtually all power generated in the GCC countries comes from conventional sources… 27
… albeit plans are afoot for significant diversification of power sources 28
Competitive environment 29
The GCC countries host a largely undiversified power market headed by state-owned bodies 29
Power insurance market value, growth and segmentation 30
Power insurance premiums grew in both nominal and real terms between 2010 and 2014… 30
…driven by increasing output in the underlying power generation sector… 32
… and in spite of softening market conditions 32
Business interruption insurance edges ahead of property insurance as the most valuable segment 33
Underwriter market shares 36
Conventional power insurance 36
As many as five underwriters may hold a market share of premiums of 10% or more 36
Renewable power insurance 38
Key brokers 38
Lockton and RFIB compete with Aon, Marsh and Willis in the power insurance market 38
Future outlook 38
Power generation 38
Renewable power generation may have begun developing by 2018… 38
Power insurance 40
… which could help the power insurance market to grow quite significantly… 40
… albeit there will need to be clarity with regards to how risks are priced up 40

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Key market data for energy (oil and gas) and power insurance in the GCC countries 2
10 INTRODUCTION 3
20 ENERGY (OIL AND GAS) INSURANCE 7
Oil production and imports in the GCC countries, 2010 to 2014 7
Natural gas production and imports in the GCC countries, 2010 to 2014 8
Oil and natural gas production (segmented between domestic consumption and exports) and imports in the GCC countries, 2010 to 2014 (table) 9
Underlying oil and natural gas production and import infrastructure in the GCC countries, 2010 to 2014 (table) 10
Energy (oil and gas) insurance premiums in the GCC countries segmented between upstream, midstream and downstream, 2010 and 2014 12
Energy (oil and gas) insurance premiums in the GCC countries segmented between upstream, midstream and downstream, 2010 and 2014 (table) 12
Energy (oil and gas) insurance premiums in the GCC countries segmented by type of risk, 2014 14
Energy (oil and gas) insurance premiums in the GCC countries cross-tabulated between upstream, midstream and downstream and type of risk, 2014 15
Energy (oil and gas) insurance premiums in the GCC countries cross-tabulated between upstream, midstream and downstream and type of risk, 2014 (table) 16
Estimated market shares of upstream energy (oil and gas) insurance underwriters in the GCC countries, 2014 17
Estimated market shares of upstream energy (oil and gas) insurance underwriters in the GCC countries, 2014 (table) 18
Estimated market shares of midstream and downstream energy (oil and gas) insurance underwriters in the GCC countries, 2014 19
Estimated market shares of midstream and downstream energy (oil and gas) insurance underwriters in the GCC countries, 2014 (table) 20
Estimated market shares of energy (oil and gas) insurance brokers in the GCC countries, 2014 21
Estimated market shares of energy (oil and gas) insurance brokers in the GCC countries, 2014 (table) 22
Oil and natural gas production in the GCC countries, 2018 (forecast) (low and high oil price scenarios) 23
Oil and natural gas production in the GCC countries, 2018 (forecast) (low and high oil price scenarios) (table) 23
Energy (oil and gas) insurance premiums in the GCC segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) 25
Energy (oil and gas) insurance premiums in the GCC segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) (table) 26
30 POWER INSURANCE 27
Power generation in the GCC countries segmented between conventional, renewable and other sources, 2010 to 2014 27
Power generation in the GCC countries segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 28
Power generation in the GCC countries segmented between conventional, renewable and other sources, 2010 to 2014 (detailed breakdown) (table) 29
Power insurance premiums in the GCC countries segmented between conventional, renewable and other sources, 2010 and 2014 31
Power insurance in the GCC countries segmented between conventional, renewable and other sources, 2010 and 2014 (table) 31
Power insurance premiums in the GCC countries segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 33

Power insurance premiums in the GCC countries segmented by type of risk, 2014 34
Power insurance premiums in the GCC countries cross-tabulated between conventional, renewable and other sources and type of risk, 2014 35
Power insurance premiums in the GCC countries segmented between conventional, renewable and other sources and type of risk, 2014 (table) 35
Estimated market shares of conventional power insurance premiums of underwriters in the GCC countries, 2014 37
Estimated market shares of conventional power insurance premiums of underwriters in the GCC countries, 2014 (table) 38
Power generation in the GCC countries segmented between conventional, renewable and other sources, 2018 (forecast) 39
Power generation in the GCC countries segmented between conventional, renewable and other sources, 2018 (forecast) (table) 39
Power insurance premiums in the GCC countries segmented between conventional, renewable and other sources, 2018 (forecast) 41
Power insurance premiums in the GCC countries segmented between conventional, renewable and other sources, 2018 (forecast) (table) 41

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